Institutional investors, like pension funds and hedge funds, tend to be conservative and extremely well-researched. They have teams of people researching the best times to buy and sell, not to mention the fact that they tend to hedge their investments very well, often maintaining portfolios of dozens if not hundreds of stocks - advantages that most "do-it-yourself" investors do not have. Investing in stocks with high institutional ownership is a good starting point for "do-it-yourself" investors who are looking for stable returns.
The stocks on this list have market caps over $10B, dividend yields over 4% and institutional ownership over 40%. Each stock on this list also carries the unique distinction of returning over 10% since January 1 and is priced less than 20 times its earnings.
Pfizer, Inc. (PFE) has a $166.88 billion market cap. PFE pays a 4.02% dividend yield, which is somewhat lower than its rival Merck (MRK)'s 4.30%, but only marginally so. The company has 72.45% institutional ownership, which is also slightly less than MRK's. But, PFE is priced much better than its competitor. It is currently priced at 17.09 times its earnings, much lower than MRK's P/E ratio of 28.34. Over the last 13 weeks, PFE's price has swelled 14.90%. It recently traded at $21.71 a share.
Plains All American Pipeline (PAA) has an $11.33 billion market cap, much smaller than the $42.68 billion market cap enjoyed by its competitor Enterprise Products Partners (EPD), but it also has 45.91% institutional ownership, which is more than twice EPD's 22.20%. PAA also pays a higher dividend than its rival at 5.44%, compared to EPD's 5.10%. PAA is currently priced at 18.13 times its earnings, better than EPD's 25.20. Over the last 13 weeks, PAA's price has gone up 18.03%. It recently traded at $75.86 a share.
H&R Block, Inc. (HRB) has a $4.96 billion market cap, making roughly one-quarter the size of Intuit, Inc. (INTU), the maker of HRB's rival Turbo Tax. The difference is significant but HRB has the advantage. It is currently priced at 12.71 times its earnings, compared to INTU's 28.06 P/E ratio. HRB pays a 4.85% dividend yield, over four times more than INTU's 1.10% yield. The company also has 91.06% institutional ownership, higher than INTU's 88.10%. Over the last 13 weeks, HRB's price rose 14.43%. It recently traded at $16.92 a share.
KKR & Co. (KKR) has a $3.10 billion market cap. It is currently priced at 19.92 times its earnings. KKR pays a 5.04% dividend yield. The company has 69.22% institutional ownership, including Leon Cooperman's Omega Advisors. Over the last 13 weeks, its price has swelled 13.71%. In comparison to its industry, KKR has stronger earnings growth estimates (12.50% over the next five years compared to its industry's 12.03%) and is priced lower relative to its earnings. KKR recently traded at $13.88 a share.
Atlas Pipeline Partners (APL) has a $2.01 billion market cap, making it one of the smallest players in its industry. APL may be amongst the smallest, but it is also priced amongst the best, at just 7.37 times its earnings. APL pays a 5.81% dividend yield and has 44.11% institutional ownership. Over the last 13 weeks, its price has gone up 13.91%. The company recently traded at $37.48 a share.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.